1.
award:
10 out of
10.00
...............points "
Apr. 2 Purchased merchandise from Lyon Company under the following terms: S4,000 price, invoice
dated April 2, credit terms of 2115, n/60, and FOB shipping point.
3 Paid S224 for shipping charges on the April 2 purchase.
4 Returned to Lyon Company unacceptable merchandise that had an invoice price of S900.
17 Sent a check to Lyon Company for the April 2 purchase. net of the discount and the returned
merchandise.
18 Purchased merchandise from Frist Corp. under the following terms: $8,450 price, invoice
dated April 18, credit terms of 2/10, n/30, and FOB destination.
21 After negotiations, received from Frist a $2,366 allowance on the April 18 purchase.
28 Sent check to Frist paying for the April 18 purchase. net of the discount and allowance.
Prepare journal entries to record the above transactions for a retail store. Assume a perpetual inventory
system.
General Journal
April 02
Merchandise inventor/
Accounts payable-lyon
April 03
Merchandise inventory
Cash
April 04
Accounts payable-Lyon
Merchandise inventory
April 17
Accounts payable-Lyon
Merchandise inventory
Cash
April 18
Merchandise inventory
Accounts payable-flist
April 21
Accounts payable-Frist
Merchandise inventory
April 28
Accounts payable-Frist
Cash
Merchandise inventory
Debit
./
./
4,000.,,
./
./
224./
./
./
900./
./
./
4.000./
224./
900J
3,100./t 62./
.1C-
3.038./1
./
./
8,450./
./
./
2.366./
./
./
6,084./
.1C
Credit
8,450./
2.366./
5,962./
122./
2•
award:
10 out of
10.00
· · · · · · · ·points··
Santa Fe Company purchased merchandise for resale from Mesa Company with an invoice price of
$27,400 and credit terms of 2110, n/60. The merchandise had cost Mesa $18,687. Santa Fe paid within
the discount period. Assume that both buyer and seller use a perpetual inventory system.
1(a)Prepare entries that the buyer should record for the purchase.
Event
General Journal
Credit
Debit
Merchandise inventory
27,400./
Accounts payable
27,400./
--~-
-~--
1(b)Prepare entries that the buyer should record for the cash payment.
Event
General Journal
Credit
Debit
Cash
yl
yl
Merchandise inventory
yl
Accounts payable
27,400./
26,852./
548./
2(a)Prepare entries that the seller should record for the sale.
Event
General Journal
yl
Accounts receivable
yl
Cost of goods sold
27,400./
18,687./
yl
Merchandise inventory
Credit
27,400./
yl
Sales
2
Debit
18,687./
2(b)Prepare entries that the seller should record for the cash collection.
Event
~
General Journal
Debit
Cash
yl
26,852./
Sales discounts
yl
yl
548./
Accounts receivable
Credit
27.400./
3. Assume that the buyer borrowed enough cash to pay the balance on the last day of the d iscount
period at an annual interest rate of 8% and paid it back o n the last day of the credit period. Compute
how much the buyer saved by following this strategy. (Use 365 d ays a year. Round your
i ntermediate cal culation s and final answer to 2 decimal p laces.)
Amount borrowed
INumber of days of interest
~nterest expense
Buye~s
net savings
$
26.852./
50.I
$
294.27./
$
253.73./
3.
S't\'3.rd:
10 out of
10.00
Allie<l Parts was organized on May 1, 20 13, and made its first purchase of merchandise on May 3. The
purchase was for 1,100 units at a price of $10 per unit On May 5, Allied Parts sold 660 of the units for
$14 per unit to Baker Co. Terms of the sale were 2110, n/60.
a. On May 7, Baker returns 231 units because they did not fit the customer's nee-Os. Allie<l Parts restores
the units to its inventory.
b. On May 8, Baker discovers that 55 units are damaged but are still of some use and, therefore, keeps
the units. Allied Parts sends Baker a cre<lit memorandum for S330 to compensate for the damage.
c. On May 15, Baker discovers that 66 units are the wrong color. Baker keeps 40 of these units because
Allie<l Parts sends a $86 credit memorandum to compensate. Baker returns the remaining 26 units to
Allie<l Parts. Allied Parts restores the 26 retume<l units to its inventory.
Prepare entries for Allied Parts to record the May 5 sale and each of the above separate transactions a
through c using a perpetual inventory system.
General Journal
Date
May05
Accounts receivable
Sales
May 05
Cost of goods sold
Merchandise inventory
Debit
./
./
9,240./
./
./
6,600./
Credit
9,240./
6,600.,I
I
May07
Sales returns and allowances
./
./
3,234./
./
.I
2,310./
./
.I
330./
450./
Accounts receivable
./
./
Merchandise inventory
./
260.,I
Cost oi goods sold
,/
Accounts receivable
May07
Merchandise inventory
Cost oi goods sold
Mayos
Sales returns and allowances
Accounts receivable
May 15
May 15
Sales returns and allowances
3.234./
2,310./
330./
450./
260./
av.'3.f'd:
4•
10 out of
10.00
·· · · · · ···points · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·
Allie<! Parts was organized on May 1, 2013, and made its first purchase of merchandise on May 3. The
purchase was for 1,100 units at a price of $10 per unit. On May 5, Allied Parts sold 660 of the units for
$14 per unit to Baker Co. Terms of the sale were 2/10, n/60.
a. On May 7, Baker returns 231 units because they did not fit the customer's needs. Allied Parts restores
the units to its inventory.
b. On May 8, Baker discovers that 55 units are damaged but are still of some use and, therefore. keeps
the units. Allie<! Parts sends Baker a cre<Jit memorandum for S330 to compensate for the damage.
c. On May 15, Baker discovers that 66 units are the wrong color. Baker keeps 40 of these units because
Allie<! Parts sends a $86 credit memorandul11l to compensate. Baker returns the remaining 26 units to
Allie<! Parts. Allied Parts restores Ille 26 returned units to its inventory.
Prepare the appropriate journal entries for Baker Co. to record the May 5 purchase and each of tile lhree
separate transactions a through c. Baker is a retailer that uses a perpetual inventory system and
purchases these units for resale.
Date
May OS
General Journal
Merchandise inventory
Accounts payable
May 07
Accounts payable
Merchandise inventory
May os
Accounts payable
Merchandise inventory
May 15
Accounts payable
Merchandise inventory
Debit
./
./
9,240./
./
./
3,234./
./
./
330./
./
./
450./
Credit
9,240./
3,234"'
330./
450./
5.
SV.'afd:
10 out of
10.00
· · · · · · · points · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ··· · .. ·
The iollowing supplementary records summarize Tosca Company's merchandising activtties for year
20 13.
Cost of merchandise sold to customers in sales transactions
$ 172,000
24,974
176,334
Merchandise inventory, December 31, 2012
Invoice cost of merchandise purchases
Shrinkage determined on December 31, 2013
Cost of transportation-in
Cost of merchandise returned by customers and restored to inventory
Purchase discounts received
Purchase returns and allowances
790
1,763
2,750
1.41 1
3,800
Record the summarized activities in the T-accounts below.
Merchandise Inventory
24,97~ Shrinkage
Balance, Dec. 31, 2012
Returns by customers
2,750./ Purchase discounts received
176,33~
Invoice cost of purc11ases
Transportation-in
Purchase returns and allowances
1,763./' Cost of sales transactions
Balance, Dec. 31, 2013
21.820
./
790./
./
1.411./
./
3,800./
./
172,000./
I
----
Cost of Goods Sold
Cost of sales transactions
Inventory shrinkage
./
Balance. Dec. 31, 2013
./
./
172.000./ Returns by customers
790./
.------~
170,040
./
±
6.
awacd:
10 out of
10.00
Using your acc·ounting knowledge, find the missing amounts in the following separate income statements
a through e. (Amou nts to be deducted should be indicated by a minus sign.)
b
8
Sales
$
74,300
$
52,604
r
29.200
8, : - r 40,609
10,528
(8.511)
(3,158)./
40,984./
10,318
7,778
55,606
18,822./
10,650
17,423
2,600
6,100
25.280 I$
'
(9,645) 1$
7,059
4,261
Total cost of merchandise purchases
42,354
17,474./
Merchandise inventory (ending)
(7,559)./
(5.061)
Cost of goods sold
41,854
--I--
Gross profit
32,446./
---
Expenses
Net income (loss)
I
9,000
$
23,446./ $
e
d
96,590./ $
Cost of goods sold
Merchandise inventory (beginning)
c
16,674
35,930./
48.295
$
10,142
42.017./
<11.642)
I
40,517./
--
53,006
$
3,008
I
12,722./
av.'3.f'd:
10 out of
7
•
10.00
........ points ............................. .
Following are the merchandising transactions for Chilton Systems.
1. On November 1, Chilton Systems purchases merchandise for $1,100 on credit with terms of 2/5, n/30,
FOB shipping point; invoice dated November 1.
2. On November 5, Chilton Systems pays cash for tile November 1 purchase.
3. On November 7, Chilton Systems discovers and returns $1 10 of defective merchandise purchased on
November 1 for a cash refund.
4. On November 10, Chilton Systems pays $55 cash for transportation costs with the November 1
purchase.
5. On November 13, Chilton Systems sells merchandise for Sl,188 on credit. The cost of tile
merchandise is $594.
6. On November 16, the customer returns merc handise from the November 13 transaction. The returned
items sell for $250 and cost $125. The merch andise is returned to inventory.
Journalize tile above merchandising transactions for Chilton Systems assuming it uses a perpetual
inventor/ system.
Date
Nov 01
General Journal
Merchandise inventory
Accounts payable
Nov 05
Accounts payable
Cash
Merchandise inventory
Nov 07
Cash
Merchandise inventory
Nov 10
Merchandise inventory
Cash
Nov 13
Accounts receivable
Sales
Nov 13
Cost of goods sold
Merchandise inventory
Nov 16
Sales returns and allowances
Accounts receivable
Nov 16
Merchandise inventor/
Cost of goods sold
Debit
Credit
./
./
1, 100./
./
./
./
1,100./
./
./f - - ./
./
1, 100./
1,078,/
22./
108./
108./
55./
55./
1.188./
./
./f - - -
./
./
594./
./
./
250./
./
./
125./
1.1 88./
594./
250./
125./
av.ard:
10out of
8
•
10.00
.............................points···
The operating cycle of a merchandising company contains the following five activites. With merchandise
acquisition as the starting point, arrange the events in the correct order.
Inventory made available for sate
1Cash collections from customers
c.
Credit sales to customers
d.
Purchases of merchandise
e.
Accounts receivable accounted for
2
5
3
4
./
./
./
./
award:
10outof
9
•
10.00
.......................... ··points
.......................................................................................................................................
Aug. 1 Purchased merchandise from Arotek Company for $9,000 under credit terms of 1/10, n/30, FOB
destination, invoice dated August 1.
4 At Arotek's request, Sheng paid $360 cash for freight charges on the August 1 purchase, reducing
the amount owed to Arotek.
5 Sold merchandise to Laird Corp. for 56,300 under credit terms of 2110, n/60, FOB destination, invoice
dated August 5. The merchandise had cost $4,498.
8 Purchased merchandise from w aters Corporation for 58,300 under credit terms of 1/10. n/45, FOB
shipping point, invoice dated August 8. The invoice showed that at Sheng's request, Waters paid the
$240 shipping charges and added that amou nt to the bill. (Hint Discounts are not applied to freight
and shipping charges.)
9 Paid $160 cash for shipping charges related ~o the August 5 sale to Lux Corp.
10 Laird returned merchandise from the August 5 sale that had cost Sheng S750 and been sold for
$1,050. The merchandise was restored to inventory.
12 Alter negotiations v.;tll Waters Corporation concerning problems with the merchandise purchased on
August 8, Sheng received a credit memorandum from Waters granting a price reduction of S1,253.
15 Received balance due from Lai rd Corp. for the August 5 sale less the return on August 10.
18 Paid tile amount due to Waters Corporation for the August 8 purchase less the price reduction
granted.
19 Sold merchandise to Tux Co. for $5,400 under credit terms of 1/10, n/30, FOB shipping point, invoice
dated August 19. The merchandise had cost $3,748.
22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet
specifications. Sheng sent Tux a $900 credit memorandum to resolve the issue.
29 Received Tux's cash payment for the amount due from the August 19 sate.
30 Paid Arotek Company the amount due from the August 1 purchase.
Prepare journal entries to record the above merchan dising transactions of Sheng Company, which applies the
perpetual inventory system.
General Journal
Date
Aug 01
./
./
9,000./
./
./
360./
./
./
6,300.I
./
.I
4.498./
./
.I
8,540./
./
.I
160./
./
.I
1,050./
./
.I
750./
./
.I
1,253./
.I
.I
./
5, 145,,.I
.I
./
./
7,287.I
.I
./
5,400.I
.I
./
3,748.I
.I
./
900.I
Cash
.I
4.455.I
Sales discounts
,,.I
45,,.I
Merchandise inventor/
Accounts payable-Arotek
--4--Aug 04
Accounts payable-Arotek
Cash
Aug 05
Accounts receivable-Laird
Sales
Aug 05
Cost of goods sold
Aug 08
Merchandise inventor/
Accounts payable-Waters
---;,;-g 09J M very expense
0 sh
Aug 10
Sales returns and allowances
Accounts receivable-Laird
Aug 10
Merchandise inventor/
Cost of goods sold
Aug 12
Accounts payable-Waters
Merchandise inventory
Aug 15
Cash
Sales discounts
Accounts receivable-Laird
Aug 18
Accounts payable-Waters
Cash
Merchandise inventory
-~I-=
Aug 19
Accounts receivable-Tux
Sales
Aug 19
Cost of goods sold
_
Aug 22
Merchandise inventory
_,I-'~
Sales returns and allowances
Accounts receivable-Tux
-~1-~
Aug 29
Credit
Debit
Accounts receivable-Tux
9,000./
360./
6,300./
4,498.I
8.540./
160.I
1.050.I
750.I
1,253.I
105./
5,250./
7,217./
70,,.I
5,400./
3,748./
900./
./
4.500./
1
Aug 30
Accounts payable-Arotek
Cash
,,.I
./
8.640,,.I
8,640./
(The
foflo~·1ing
inforn1ation applies to tile quesUons iiiSPiiJYed
.........................................................................................................................................................
be'iOi~l:f
The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.
NELSON COMPANY
Unadjusted Trial Balance
January 31, 2013
Debrt
Credit
Cash
Merchandise inventor/
Store supplies
Prepaid insurance
Store equipment
Accumulated depreciation- Store equipment
Accounts payable
J. Nelson, Caprtal
J. Nelson, Withdrawals
Sales
Sales discounts
Sales returns and aJlowances
Cost of goods sold
Depreciation expense-Store equipment
Salaries expense
Insurance expense
Rent expense
Store supplies expense
Advertising expense
$ 22,600
Totals
$184,450
1 4,000
5,900
2,500
43,000
$ 16,800
15,000
37,000
2,250
115,650
1,900
2,100
38,000
0
26,500
0
16,000
0
9,700
$184,450
Rent expense and salaries expense are equally divided between selling activities and the general and
administrative activities. Nelson Company uses a perpetual inventory system.
a.
b.
c.
d.
10.
Store supplies still available at fiscal year-end amount to $2,950.
Expired insurance, an administrative expense, for ~he fiscal year is S1,650.
Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year.
To estimate shrinkage, a physical count of ending1merchandise inventory is taken. It shows $10,200
of inventory is still available at fiscal year-end.
S't\'3rd:
10outof
10.00
Required :
1. Using the above information prepare adjusting journal entries:
Jan 31
Store supplies expense
Store supplies
Jan 31
Debit
General Journal
Date
.,/
.,/
Insurance expense
2.950.,/
2,950.,/
1,650.,/
Prepaid insurance
Jan 31
Depreciation expense-Store equipment
Accumulated depreciation-Store equipment
Cost of goods sold
Merchandise inventory
Credit
1,650.,/
.,/
1,675.,/
.,/
.,/
.,/
1,675.,/
3,800.,/
3,800.,/
award:
10out of
11
• 10.00
. . . . . . .. 'jjoii\IS' . . . . . . . . . . . . . . . . . . . . . . . . . .. .
2. Prepare a multiple-step income statement for fiscal year 2013.
NELSON COMPANY
Income Statement
For Year Ended January 31, 2013
Sales
--...-$
Less: Sales discounts
./ $
1,900./
Less: Sales returns and allowances
./
2,100./
Net sales
./
Cost of goods sold
./
./
Gross profit
Expense
115.650./
4.000
.~~~~~~~~~~~~~
+
Selling expenses
111,650
41.800./
69,850
._
Advertising expense
9,700.,I
Depreciation expense-Store equipmen t
1,675./
Rent expense-Selling space
8,000./
Sales salaries expense
13,250./
Store supplies expense
2,950v'
0
0
Total selling expenses
35,575
General and administrative expenses
Insurance expense
./
1,650./
Office salaries expense
./
13,250./
./
8,000./
Rent expense-Office space
~~--~~~~~-!
Total general and administrative expenses
Total expenses
Net income
22,900
I
I
$
58,475
11,375.I
12 -
award:
10out of
10.00
.............................poims··
3. Prepare a single-step income statement for fiscal year 2013.
NELSON COMPANY
Income Statement
For Year Ended January 31 , 2013
Net sales
./
$
111,650./
Expenses
General and administrative expenses
./ $
22,900./t -
Selling expenses
./
35,575./
Cost of goods sold
41,800./
0
oT_
Total expenses
Net income
I
$
100,275
11,375./
13.
S'N3.!d:
10 out of
10.00
4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2013. (Round
you r answers to 2 decimal p laces.)
Current ratio
24 4.,I
Acid-test ratio
1.56.,I
Gross margin ratio
0.60.,I
1
Valley Company's adjusted trial balance on August 31, 2013, its fiscal year-end, follows.
Debit
31,000
124,000
Merchandise inventory
Other (noninventory) assets
Total liabilities
K. Valley, Capital
K. Valley, Withdrawals
Sales
Sales discounts
Sales returns and allowances
Cost of goods sold
Sales salaries expense
Rent expense-Selling space
Store supplies expense
Advertising expense
Office salaries expense
Rent expense-Office space
Office supplies expense
s
Totals
$ 352,486
Credit
$ 35,805
104,641
8,000
212,040
3,244
13,995
82,768
29,049
9,966
2,544
18,023
26,505
2,544
848
$ 352,486
On August 31, 2012, merchandise inventory was $25,017. Supplementary records of merchandising
activities for the year ended August 31, 2013, reveal the following itemized costs.
Invoice cost oi merchandise purchases
Purchase discounts received
Purchase returns and allowances
Costs of transportation-in
14.
$ 91,140
1,914
4,375
3,900
award:
10 out of
10.00
· ·· ·· ·· ·· ·· ··· points · ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· · ··
Required:
1. Compute the company's net sales for the year.
Net sales
15 '
$
194,801./
award:
10out of
10.00
·· ·· ·· ·· ·· ·· ·· points ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· ·· · ··
2. Compute the company's total cost of merchandise purchased for Ille year.
otal cost of merchandise purchased
$
88,751./
16 •
av.ard:
10out of
10.00
.............................PO'i'Ots ···
3. Prepare a multiple-step income statement that includes separate categories for selling expenses and
for general and administrative expenses.
VALLEY COMPANY
Income Statement
For Year Ended August 31, 2013
Sales
./
Less: Sales discounts
./
3,244./
Less: Sales returns and allowances
./
13,995./
Net sales
./
./
Cost of goods sold
Gross profit
Expense
Selling expenses
Advertising expense
Store supplies expense
Rent expense - Selling space
Sales salaries expense
$
17,239
194,801~
82,768./
4F --f
./
./
./
./
212,040./
112,033
18,023./
2,544./
9,966./
29,049./
0
Total selling expenses
General and administrative expenses
Office salaries expense
Rent expense - Office space
Office supplies expense
~
./
./
./
Total general and administrative expenses
Total expenses
Net income
I./
oT
59.582
26,505./
2,544./
848./
I
I
$
29,897
89,479
22,554./
award:
10outof
17
. 10.00
............................. pornts ...................................................................................................................
4. Prepare a single-step income statement that includes these expense categories: cost of goods sold,
selling expenses, and general and administrative expenses.
VALLEY COMPANY
Income statement
For Year Ended August 31, 2013
Net sales
./
$
I
Expenses
General and administrative expenses
Cost of goods sold
./
./
./
Total expenses
J
Net income
./
Selling expenses
-
194,801 ./
29.897./
59,582./
82.768./
--
0
0
I
1$
172,247
22,554./
18.
award:
10outof
10.00
From the dropdown box beside each definition, select the appropriate letter for each term.
A. Sales discount
B. Credi! period
C. Discount period
D. FOB destination
-
E. FOB shipping point
F. Gross profit
G. Merchandise inventory
H. Purchase discount
I. Cash discount
J. Trade discount
Goods a company owns and expects to sell toils customers.
G
Time period that can pass before a customer's payment is due.
8
3.
Seller's description of a cash discount granted lo buyers in return for ea ~y payment
A
4.
•5.
Reduction below list or catalog price that is negotiated in setting the price of goods.
J
Ownership of goods is transferred when the seller delivers goods to the carrier.
E
6.
Purchaser's description of a cash discount received from a supplier of goods.
H
7.
Reduction in a receivable or payable if it is paEd within the discount period.
I
,8.
Difference between net sales and the cost of goods sold.
F
f9.
Time period in which a cash discount is available.
c
Ownership of goods is transferred when delivered to the buyer's place of business.
D
1.
' 2.
-
10.
--
--
--
-- --
--
.I
.I
.I
.I
.I
.I
.I
.I
.I
.I
19 •
S't\'3.rd:
10 out of
10.00
...... ··· ··· ··· ··· ··· ·points ···· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ··· ...
The cost of merchandise inventor/ includes which of the following:
0
c. Costs incurred to buy the goods.
0 a.Costs incurred to make the goods ready for saJe.
0
d. Both band c.
@ e. a, b, and c.
0 b. Costs incurred to ship the goods to th-e store(s).
20
award:
10 out of
10.00
.
...............
points .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ... .. ........................................................................... ·
Nov. 5 Purchased 600 units of product at a cost of $10 per unit. Terms of the sale are 2110, n/60; the
invoice is dated November 5.
Nov. 7 Returned 25 defective units from the November 5 purchase and received full credit
Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7.
Prepare the journal entries to record each of the above purchases transactions of a merchandising
company. Assume a perpetual inventory system.
Date
Nov 05
Nov 07
Merchandise inventory
./
Accounts payable
./
Accounts payable
Merchandise inventory
Nov 15
Debit
General Journal
Accounts payable
Gash
Merchandise inventory
Credit
&
6.000./
6,000./
./
./
250./
./
./
./
5.750./
250./
5,635./
115./ •
•
21.
award:
10 out of
10.00
· · · · · · · ·points · · · · · · · · · · · · · · · · · · · ...... · · · · · .. · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ··· · · ··
Apr. 1 Sold merchandise for $3,000, granting the customer terms of 2/10, EOM; invoice dated April 1.
The cost of the merchandise is $1 ,800.
Apr. 4 The customer in the April 1 sale returned merchandise and received credit for $600. The
merchandise, which had cost $360, is returned to inventory.
Apr. 11 Received payment for the amount due from the April 1 sale less the return on April 4.
Prepare journal entries to record each of the above sales transactions oi a merchandising company.
Assume a perpetual inventor/ system.
Gene
Date
i__;;,;;;;;~~..-~~~~;;,.;;.;;~ -
Apr. 1
Journal
Accounts receivable
Debit
Credit
3,000./
Sales
Apr. 1
Cost of goods sold
1,800./
Merchandise inventory
Apr. 4
Sales returns and allowances
Accounts receivable
600./
Apr. 4
Merchandise inventor;
Cost of goods sold
360./
Apr. 11
Cash
Sales discounts
Accounts receivable
2,352./
48./
S't\'3.rd:
22.
10 out of
10.00
a
$ 150,000
5,000
20,000
Sales
Sales discounts
Sales returns and allowances
Cost of goods sold
79,750
b
c
$550,000 $ 38,700
17,500
600
6,000
5,100
329,589
24,453
d
s 255,700
4,800
900
126,500
Compute net sales. gross profit, and the gross margin ratio for each separate case a through d. (Round
your gross margin ratio to 1 decimal place.)
(a)
Net sales
$
(c)
(b)
125,00G./ $
526.500./ $
(d)
33,000./ $
250.000./
l Gross profit
45,250./
196,911./
8,547./
123,500./
IGross margin ratio
36.2%./
37.4%./
25.9%./
49.4%./
23 .
award:
10 out of
10.00
..............................points···
Nix'lt Company's ledger on July 31, its fiscal year-end, includes the following selected accounts that have
normal balances (Nix'lt uses the perpetual inventory system).
Merchandise inventory
T. Nix, Capital
T. Nix, Withdrawals
Sales
Sales discounts
$
37,800
115,300
7,000
160,200
4,700
Sales returns and allowances
Cost of goods sold
Depreciation expense
Salaries expense
Mis.cellaneous expenses
s
6,500
105,000
10,300
32,500
5,000
A physical count of its July 31 year-end inventor/ discloses that the cost of the merchandise inventor/
still available is 535,900. Prepare the entry to record any inventory shrinkage.
Date
July 31
General Journal
Cost of goods sold
Merchandise inventory
Debit
./
./
Credit
1.900./
1,900./
24.
S't\'3.rd:
10 out of
10.00
Identify whether each description best applies to a periodic or a perpetual inventory system.
Description
Inventory system
a.
Updates the inventory account only at period-end.
Periodic inventory system
./
b.
Requires an adjusting entry to record inventory shrinkage.
c.
Markedly increased in frequency and popularity in business witllin the past decade.
Perpetual inventor/ system
Perpetual inventory system
d.
Records cost of goods sold each time a sales transaction occurs.
Perpetual inventory system
e.
Provides more timely information to managers.
Perpetual inventory system
./
./
./
./
25 .
&'9\'al'd:
10 out of
10.00
................... ·poii\Hf .
Income statement information for adidas Group, a Gem1an footwear, apparel, and accessories
manufacturer, for the year ended December 31 , 2011, follows. The company applies IFRS, as adopted
by the European Union, and reports its results in millions of Euros.
Net income
Financial income
Financial expenses
Operating profrt
Cost of sales
Income taxes
Income before taxes
Gross profit
Royal~/ and commission income
Other operating income
Other operating expenses
Net sales
€
670
31
115
1,011
7,000
257
927
6,344
93
98
5,524
13,344
1. Prepare the multiple-step income statement for the company for the year ended December 31 , 2011 .
(Enter you r answers in millions.)
ADIDAS GROUP
Income Statement (€ mfflions)
For Year Ended December 31, 2011
Net sales
./ €
Cost of sales
Gross profit
./
7,000./
./
6,344./
13,344./
0
Royalty and commission income
93./
other operating expenses
./
./
./
5.524./
Operating profit
./
1.011./
Financial expenses
./
115./
Financial income
./
./
./
other operating income
Income before laxes
Income taxes
98./
~
31./
927./
257./
0
Net income
./€
670./
2. Prepare the single-step income statement for tile company for tile year ended December 31, 2011.
(Enter your answers in millions.)
ADIDAS GROUP
Income Statement (€ millions)
For Year Ended December 31, 2011
Revenues
Net sales
Royalty and commission income
€
93./
other operating income
98./
Financial income
t
Total revenues
Expenses
other operating expenses
./€
./
./
Income taxes
./
Cost of sales
Financial expenses
Total expenses
Net income
13,344./
--t-
31./
--~
~
j
13,566j
7,000./
115./
5,524./
257./
~
€
j
12.096
610
I
I